The FTSE asset manager, which has been battling shareholder discontent driven by under performance in its main fund, will not pay an upfront fee for FRM, highlighting the increased pressure faced by hedge funds. Volatile markets and historically low returns have made it harder for hedge funds to resist the need for consolidation.

Man will pay a maximum of $82.8m in cash as well as 47.5pc of performance fees attributable to FRM’s existing funds, subject to a cap until 2015. Man said the deal would “significantly improve the profitability” of Man’s multi-manager business, which will now run $19bn of funds.